Place-Based Redistribution in Location Choice Models

Morris Davis and Jesse M. Gregory

No 29045, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In recent location choice models, households randomly vary with respect to their utility of living in a location. We demonstrate the distribution generating this randomness is not identifiable from location choice data and the optimal allocation chosen by a social planner is not identified. We propose an algorithm for setting the distribution generating the random utility across locations that implies a planner will optimally choose no redistribution in the absence of externalities or equity motives between different types of people. Our algorithm preserves a planner's motives to redistribute due to equity considerations between types of people and efficiency in production.

JEL-codes: H0 R38 (search for similar items in EconPapers)
Date: 2021-07
New Economics Papers: this item is included in nep-dcm, nep-isf, nep-upt and nep-ure
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